Why businesses struggle with customer loyaltyby
In his latest article on customer loyalty, John Aves of CP2 Experience outlines the bad behaviours that businesses must avoid if they want to attract and retain loyal customers.
We want to go out on a limb here and say that from our experience, most brands struggling with customer loyalty spend too little time focusing on their internal work.
We all know that fixing issues with loyalty is difficult. And it's made worse by bad behaviours that businesses find difficult to shake off (that's if they are even aware they have a problem).
You often find that the same mistakes are repeated again and again; that some mistakes are rooted in myths; and some are even rooted in disbelief.
Let's take a look at these customer loyalty myths.
1. Doing the basics well is enough to keep your customers
This is untrue. Businesses often over-rely on what has become the basics in their attempts to differentiate. Investing in digital, a new customer service system, and friendly staff, for example.
Customers don't see these as reasons to be loyal. Yes, they do them well. But they are just the functional basics that they expect from any business.
Who doesn't want good quality products and services at prices that represent good value for money? What business isn't investing in digital or technology?
We're not saying that being consistent on the basics isn't important; it is. If you let customers down on these, they'll take their business elsewhere. But it doesn't drive customers to come back, trade up, spend more or recommend you to their friends and family.
Customers are mired in adequate experiences from businesses jostling to differentiate on 'good'. If you want to grow the customers you already have, you need to set your sights on 'wow’. And tempt some away from your competitors.
If you want to grow the customers you already have, you need to set your sights on 'wow’.
Emotionally committed relationships foster true loyalty. Emotion is the biggest driver of loyalty in most industries. These relationships can be built through differeniated experiences, empathetic interactions or a shared sense of purpose, values and beliefs.
Customers who are emotionally invested in a business keep that company on their mind when they need something.
Does your business understand how to tap into the emotional drivers that make your customers behave loyally?
2. Satisfaction drives loyalty
All the evidence tells us that 'satisfied’ is a low rung on the loyalty ladder. Simply satisfying customers doesn’t cut it any longer. Satisfaction, on its own, won't shift the dial.
The reality is that a staggering 75% of customers who leave a company were satisfied with their previous supplier. You need to ask yourself: are we making a mistake by conflating high levels of customer satisfaction with strong customer relationships?
3. Our customers only care about price
Right? Not quite. Customer experience overtook price and product as a differentiator years ago. Of course, price is important, especially in these difficult times. And buyers have information at their fingertips to discover new products and services and make judgements about value for money.
But there's a price myth that isn't challenged enough, especially when it comes to commoditised markets.
Customer experience overtook price and product as a loyalty differentiator years ago.
From razors to residential insurance, there's a widely-held belief that customers only care about price in these types of markets. Get your price point right, and customers will naturally be more loyal. This isn't true. Just ask First Direct, British Gas, Dollar Shave Club, Revolut or Peloton customers what they think.
If your products have become commoditised, are you doing enough to build a loyal following? Or are your customers leaving for businesses that understand how to position their products in customers' lives and stand out on experience?
The disbeliefs ...
1. Some organisations are in denial
Problem? What problem? All too often, companies communicate, market, sell and support customers in ways that suit them. The justification? “It’s what customers want”.
2. Others see churn as the natural order of things
They attribute low levels of customer loyalty to factors outside of their control. Competition is relentless, and regulation is strong. Customers are naturally promiscuous. They are essentially blaming customers for exercising their choice when they have failed to give them a reason to remain loyal.
3. The plan will never work
Some businesses may have taken steps to address their defection, loyalty and spend challenges. They continue tinkering – a new social media campaign, some improvements to the online shopping site, additional customer rewards added to the loyalty scheme – but they still don’t manage to move the needle.
4. Some companies still live in a “build it, and they will come” world
The business has a great product. So why wouldn't people want to stay? It works for Apple. But can you say that about your company?
Does any of this ring true for your business? Or, if you have been struggling with loyalty and are not sure why, don't be concerned. Learn more by downloading our guide: An Inconvenient Truth: Why Creating Customer Loyalty Starts With You.
The over-arching focus of John's work over 30 years has been in the area of customer led change. He is passionate about customer experience as a strategy to drive customer loyalty, employee pride and profitable growth. He believes that every successful customer strategy needs to focus first on the people within the organisation in order to...